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Tax season can be stressful, especially if you’re worried about making mistakes that might attract unwanted attention from the IRS. While most people try to file accurate returns, common errors can lead to audits, penalties, or unexpected tax bills. The good news? Most of these mistakes are avoidable if you know what to look out for.

Here are the biggest mistakes taxpayers make during tax season that can trigger IRS enforcement—and how you can avoid them.

1. Simple Typos and Input Errors

Believe it or not, a small typo—like transposing numbers, mismatching Social Security details, or claiming a dependent incorrectly—is one of the top reasons for IRS notices and audits.

The IRS matches information from your tax return to what’s reported by employers, banks, and other institutions. If something doesn’t align, it can cause problems.

How to Avoid This:

• Double-check all information you input, including Social Security numbers and income figures.
• If you use a tax preparer, review the return carefully before signing off.

2. Forgetting to Report All Income

Missing or unreported income is another common trigger for IRS scrutiny. This includes income from part-time jobs, freelance gigs, rental properties, or even cash payments.

The IRS receives copies of your W-2s, 1099s, and other income statements. If you fail to include any of these, their automated systems will flag it.

What You Can Do:

• Make a checklist of all income sources, including side gigs, freelance work, and investments.
• Check your mail and email for all income-related forms (W-2s, 1099s, etc.).
• If you’re unsure what income the IRS has on file, you can request a wage and income transcript directly from the IRS.

3. Using Rounded or Estimated Numbers

Expenses that are perfectly rounded (e.g., $5,000 for travel, $10,000 for supplies) are red flags for the IRS. Real expenses rarely come in nice round numbers, so these can look suspicious.

For example, if you report a Schedule C business with neatly rounded expenses across every category, the IRS might think you’re estimating or inflating numbers.

How to Avoid This:

• Always use exact amounts based on receipts and bank statements.
• Keep records of your expenses to back up the numbers on your return.

4. Claiming Non-Cash Charitable Contributions Without Proper Documentation

Donating non-cash items like furniture, artwork, or real estate is a great way to give back—and claim a tax deduction—but there are strict rules. If you don’t follow them, your deduction could be denied.

IRS Rules for Non-Cash Donations:

• For donations over $500, you must complete Form 8283.
• For donations over $5,000, you need a qualified appraisal.

Without proper documentation, the IRS can disallow your entire deduction—even if the donation had real value.

However, it should be noted that the appraisal must be attached to the return only if the claimed deduction is more than $500,000. For donations over $5,000 but less than $500,000, the appraisal must be obtained but not necessarily attached to the return

What You Should Do:

• Always get a written acknowledgment from the charity.
• For donations over $5,000, hire a qualified appraiser.

5. Turning a Hobby Into a “Business”

If you claim losses year after year for a side business, the IRS may decide it’s really just a hobby. Under IRS rules, you can only deduct business losses if you’re running the activity with the intent to make a profit.

The IRS assumes an activity is a hobby if it hasn’t turned a profit in three out of the last five years (two out of seven years for horse-breeding activities).

How to Prove It’s a Business:

• Keep separate bank accounts and records for the business.
• Document your efforts to make a profit, like marketing or consulting with experts.
• Track time and money spent on the activity to show it’s not just for fun.

6. Claiming Ineligible Dependents

Claiming a person as a dependent who does not meet the legal definition, or failing to include a dependent's valid Social Security number, can result in an underpayment of tax and may trigger an audit 

7. Mismatch Between Gross Receipts and Sales Tax Returns

If you run a small business, the IRS and state tax agencies compare your reported federal gross receipts to your state sales tax returns. If the numbers don’t match, it can raise questions.

Example:

If your federal return shows $500,000 in gross receipts, but your state sales tax return reports $400,000, the state may assume you underreported taxable sales.

What You Can Do:

• Review your sales tax filings alongside your federal return to ensure they align.
• Keep records that explain any deductions or non-taxable sales.

8. Failing to Disclose Foreign Accounts or Digital Assets

Foreign bank accounts and digital assets (like Bitcoin) remain top priorities for IRS enforcement. Failing to disclose these can result in harsh penalties.

• Foreign Accounts: If the total balance of your foreign accounts exceeds $10,000 at any time during the year, you must file an FBAR (Report of Foreign Bank and Financial Accounts).
• Digital Assets / Virtual Currency: If you own, buy, or sell digital assets (also known as virtual currency), you must answer “yes” to the related question on your tax return and report any gains or losses.

The IRS has increased its focus on digital assets, including NFTs. Taxpayers must check "yes" on Form 1040 if they received digital assets as a reward, award, or compensation or if they sold, exchanged, or otherwise disposed of digital assets

How to Stay Compliant:

• Report all foreign accounts and virtual currency activity.
• Keep detailed records of transactions to calculate gains, losses, or balances accurately.

9. Not Reviewing Your Return for Accuracy

Many people rely on tax preparers or software to file their returns, but you’re still responsible for its accuracy. If the IRS finds mistakes or missing information, you’re the one on the hook for penalties.

How to Protect Yourself:

• Review every line of your return before submitting it.
• Ask your tax preparer to explain any numbers you don’t understand.
• Confirm that all forms (like W-2s and 1099s) are included.

10. Filing Incomplete or Inaccurate Returns

Filing a return that you know is incomplete—such as missing a key form like a 1099 or K-1—can create significant problems. Some people file with placeholders, planning to amend later, but this approach risks penalties and IRS scrutiny.

Better Option: File an extension if you’re waiting on documents. It’s better to submit an accurate return later than an incomplete one now.

Final Thoughts

The IRS is cracking down on mistakes, big and small, so accuracy is critical. Whether it’s a simple typo, missing income, or an unsupported deduction, errors can lead to audits, penalties, and frustration.

Key Steps to Protect Yourself:

• Double-check your return for accuracy before filing.
• Report all income—no matter how small.
• Avoid rounding numbers or estimating expenses.
• Get qualified appraisals for non-cash donations over $5,000.
• Keep records to back up deductions, business activities, and foreign account disclosures.

By staying organized and proactive, you can file with confidence and avoid common tax season pitfalls.